EU rules out US-style bailouts

However, referring to the recent decision by the US to buy $700 billion (€476 billion) of bad debt from banks and other financial institutions, he stressed that "the situation we face here in Europe is less acute and member states do not at this point consider that a US-style plan is needed."

"We are talking about a US plan, adapted for circumstances in the United States, where, it should be recalled, the crisis originated and where the financial sector has been most severely affected," the commissioner pointed out.

Also speaking in the parliament, France's state secretary for European affairs, Jean-Pierre Jouyet, whose country currently holds the six-month rotating EU presidency, offered up the same position, saying that the European financial system is "still stable and doesn't need this kind of measure."

Both insisted however, that this does not mean more regulation is not needed, as banks' opaqueness is among the factors creating a "dramatic fall in confidence" in the markets.

"This laissez-faire attitude will not benefit anyone. It's too late for that. We now need to consider the extent of the risk, the power of the regulatory authorities and the type of intervention," Mr Jouyet said.

For his part, Mr Almunia stressed that following the latest events in financial markets, "the current model of regulation and supervision needs to be revamped."

Brussels expected to take measures

The debate in parliament came just a day after MEPs called on the European Commission to come up with legislative proposals to improve regulation of the financial sector, notably targeting hedge funds and private equity firms.

EU internal market commissioner Charlie McCreevy on Monday dismissed such calls, saying no additional regulation was needed for the funds.

But on Wednesday, Mr Almunia said the EU executive would next month present new rules for the banking sector, in particular on how much banks are allowed to keep in reserves, and how regulators should act where there is a danger of a bank collapsing.

It will issue a proposal on the monitoring of credit rating agencies, which have been criticised in the wake of the crisis for failing to alert investors about certain risks and for listing some risky debts as safe.

He also said he would tackle the issue of executive pay: "We need to think about the systems of remuneration of executive directors [and] CEOs," Mr Almunia said, adding that the topic will be discussed at the next meeting of EU finance ministers.

Some MEPs remained sceptical and said Brussels' actions so far had not been convincing.

"It has been more than a year since the financial crisis started [and] there is still no regulation," French Socialist MEP Pervenche Beres said, citing the credit rating agencies as an example.

"There's a problem with governments not trusting each other when it comes to tightening financial regulation and with the commission not being up to the task," she later told reporters.

For his part, Mr Jouyet stressed that the commission "must be able to take swift action. We must restore confidence and re-insure people. "

"We must have proposals on the table for the [EU summit] meeting of 15 October," he added.